I have a lot to say on the subject of design fees. Perhaps because establishing the correct fee is one of the most difficult parts of the process of designing a project. Perhaps because architecture is part art and part science it is especially difficult.
First of all, there are several types of fees. There is time and expense, which is great for the designer because you get paid for all your work. There is fixed fee, which is what we most typically do. There is percentage of construction cost, which seems like a conflict of interest because the costs can easily go up, and you don’t want your designer to be incentivized for that. And there is also time and expense with a not to exceed.
The first firm I worked for did time and expense with a not to exceed, and when I was doing the accounting I learned to hate that method because we were always writing off time when we exceeded the cap, and we were leaving money on the table when we didn’t need to do so. I felt that if we had been doing fixed fees, at least some times we should be rewarded when we were efficient.
Doing the fixed fee is good for the conflict adverse, because once the two parties agree to the fee, the discussion is over. I like that. The invoices get paid quicker with less questions. However, it is often the case that the projects go over budget, or clients decide to add things along the way. So fixed fee requires the most clarity in the scope description and the best planning.
Hourly work can be good for both parties if they already know each other well. It is good for the client because they can simply request work and expect to have it started on immediately. The consultant knows they will be paid. But the downside is that I have had many clients come to me over the years having been taken advantage of by unscrupulous individuals that provided very little value.
How do you like to set up your agreements?
More to come soon. If you want to get in touch please let me know! Thanks for reading!